A NATION CHALLENGED: THE INSURERS; Insurers Ask Help to Survive Future Losses

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Insurance executives told Congress today that they had plenty of money to pay for about $40 billion of losses from the terrorist attacks on Sept. 11. But they said they urgently needed help to provide coverage for possible future violence.

In testimony before the House Committee on Financial Services, some of the leading insurers argued that since terrorism had the potential for enormous repeated financial blows, the government should take responsibility for paying the most expensive claims. They said they were not seeking a bailout, similar to the $15 billion relief package that the airlines received last week, but assistance in confronting an immeasurable financial abyss.

''There's no way to price for this,'' said Ronald E. Ferguson, the chairman of General Re, one of the country's largest insurers and a unit of Berkshire Hathaway, in an interview after the hearing. ''There's no way you can expose your capital and your shareholders to what amounts to almost infinite risk.''

Dean R. O'Hare, the chief executive of the Chubb Corporation, another big insurer, told lawmakers that something had to be done quickly. ''We have a crisis brewing as we speak,'' he said.

Negotiations are under way for renewal of much of the nation's commercial insurance, he said. No insurer, he said, is prepared to take on all the risk of any huge corporation; and so far, none of the reinsurance companies that usually share the risk with retail or primary insurers are willing to provide terrorism coverage.

Unless a solution is found quickly, he said, American corporations will have no coverage for terrorism and, in the event of an attack, will have to pay for their own losses. That would bankrupt some companies and disrupt the national economy.

Representative Christopher Shays, a Republican from Connecticut, responded with skepticism. Was the question of insurers' providing coverage, he asked, a matter of ''can't or won't?''

Mr. O'Hare responded, ''There's no way on earth a single company could offer hundreds of millions of coverage on its own.''

Lawmakers generally responded sympathetically to the insurers, praising them for their decision to ignore war provisions in much of their coverage that might have enabled them to refuse to pay claims in the recent attacks. But they made it clear they were not eager to draw the government into the insurance business and take on commitments for untold billions.

''I would be extremely reluctant to accept any plan that puts the taxpayer on the hook for insurable losses,'' said Representative Richard H. Baker, a Republican from Louisiana. Particularly, he added, ''when there is no federal office that exercises any real jurisdiction over solvency and business practices of the industry.''

Insurance is regulated state by state without industrywide federal oversight.

In the short term, some help could come from the Securities and Exchange Commission. Harvey L. Pitt, the chairman of the S.E.C., told legislators that the agency was considering easing regulations to allow the airline and insurance industries to raise capital more quickly. He also said he might ask Congress to extend a waiver on certain trading regulations that has permitted companies and executives to help prop up the price of their shares. With the waiver, publicly traded companies can buy their own shares without the normal restrictions on volume and timing.

As a model for government action, the insurers cited a plan developed in London in the early 1990's in response to Irish Republican Army attacks in which private insurers paid the first $150,000 or so for terrorist damage. Then a pool of money created by contributions from insurers and the government paid claims. When those funds were exhausted -- which the insurers said had never happened in London -- the government would pay.

No previous terrorist attacks anywhere have come close to the ones in New York and Washington in casualties -- more than 6,000 people are missing and presumed dead -- and financial losses.

Until those attacks, terrorism coverage was included along with other commercial coverage in the United States, at no extra charge, under the assumption that the chance of its ever being used was remote.

Kathleen Sebelius, the president of the National Association of Insurance Commissioners, the organization of state insurance regulators, encouraged the lawmakers to consider giving the industry financial backing. But she cautioned against any ''new mechanism that would discourage private market capital.''

The nation's insurers have tried for several years to get the government to take on the highest costs in natural catastrophes like hurricanes and earthquakes. But today, Mr. Ferguson said he felt the government had a greater obligation to help out with terrorism. ''After all,'' he said, ''the basic duty of the government is to defend its citizens.''

The insurers and members of Congress said they expected furious negotiations on the issue over the next few days. ''This is an issue for today, tomorrow and the next day,'' Mr. Ferguson said, ''not next year.''

But Mr. Shays said he did not expect Congress to decide as quickly on the insurance issue as it did on the bailout of the airlines, which was accomplished in a few days.

''I have confidence that this is going to be legislation that is going to be thoroughly debated,'' Mr. Shays said, ''and is not just going to go through.''

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